Development of the labour market in East German regions

Abstract

"The shock-like opening of the economy of East Germany had far-reaching impacts on the inhabitants of this region. The living conditions improved, but massive labour market Problems also developed, which are analysed in this article especially with regard to unemployment in two steps: to begin with, the focus is on East Germany as a unit, in this connection labour supply is also considered more closely. This is followed by an analysis of the regional differentiation of the labour markets in East Germany. 20 years after the fall of the wall the economy and the labour market in Germany are still characterised by a strong westleast disparity. East Germany lost a relevant Part of its population through out-migration due to unfavourable labour market conditions. Nevertheless the level of unemployment remained around 20% for a long time. This can be attributed inter alia to the fact that the market potential of East Germany is too small. Only in the last years the unemployment rate has declined more strongly in East Germany than in the west. Even in times of crisis unemployment dropped to 13.2% in November 2009. Within East Germany a strong differentiation of the labour market situations results which remains relatively stable over time. The development of unemployment is analysed in a spatial econometric model. In this context weak processes of convergence are found. For the reduction of unemployment the cores of the manufacturing industry prove to be favourable. The development in the regions is influenced by the development in the neighbouring areas, since a spatial autocorrelation can be noted. There is the danger that at least the sparsely settled rural areas of East Germany are still disadvantaged further, as the decline of the population will have particularly critical impacts in their case. This population decline is characterised particularly by the low birth rates and will have drastic impacts an the labour supply." (Author's abstract, IAB-Doku) ((en))

Cite article

Blien, U., Fuchs, J. & Phan thi Hong, V. (2010): Arbeitsmarktentwicklung in ostdeutschen Regionen. In: Informationen zur Raumentwicklung No. 10/11, p. 773-785.